Economic Growth of Canada: Analysis of GDP, Employment and Export

This report analyzes the economic growth of Canada with the help of macroeconomic factors like GDP growth, employment opportunity and export. It also presents the future trend of economic growth. The report discusses the reason behind the economic growth and the constraints it is facing. It also includes a conclusion based on the entire discussion.

Running head: ECONOMIC GROWTH OF CANADA
Economic growth of Canada
Name of the university
Name of the student
Author Note

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Executive summary:
Canada, one of the developed countries, is the member of G7. It has possessed huge natural
resources and developed industrial sectors. However, the country’s economic growth is
facing some constraints. Hence, this report intends to analyze those concepts with the help of
some macroeconomic factors like GDP growth, employment opportunity and export.
Moreover, this report is going to present the future trend of economic growth.

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Table of Contents
Introduction:...............................................................................................................................3
Economic growth of Canada:.....................................................................................................3
Reason behind economic growth:..............................................................................................4
Future of Canadian economic growth:.......................................................................................8
Conclusion:................................................................................................................................9
References:...............................................................................................................................10
Appendix:.................................................................................................................................12

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Introduction:
Canada, becoming the world’s 10th largest economy based on total national income in
2016, along with mixed economic structure, has earned significant importance worldwide.
The two chief dominating sectors are primary and tertiary ones including logging, oil and
service industry. The country has also possessed strong banking network, infrastructural
facilities and other manufacturing services, which in turn has helped the country to develop
faster (BNN, 2018). Hence, it can be beneficial to analyze the economic growth of this
country under the light of specific macroeconomic concept. Thus, this report intends to
analyze the reason and future of this growth with the help of some recent new articles after
discussing the present situation. At the end, a conclusion based on entire discussion can be
provided.
Economic growth of Canada:
According to the data of Statistics Canada, the economic growth of this country has
declined by 0.1% in January 2018. Based on the BNN report, some temporary factors can be
analyzed that have affected the country’s January GDP, adversely. Non-conventional
extraction has been decreased by 7.1 % due to closing of some oil facilities because of
unscheduled maintenance (BNN, 2018). Moreover, Canada has experienced a strict mortgage
lending rules, which in turn has led the country to decrease the leasing, rental and real estate
by 0.5%. However, at the end of 2017, the country has experienced the fastest growing trend
of economy after 2011, because of significant consumer spending and strong housing market.
Canada’s employment opportunity has increased significantly and consequently the specified
country has remained the fastest growing one among all members of G7
(Www120.statcan.gc.ca, 2018). Canada’s economy has enhanced overall by 3% during 2017.

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Figure 1: Percentage change in real GDP, quarter wise of Canada
Source: (tradingeconomics.com, 2018)
It can be observed from figure 1 that Canada’s economy has expanded at 1.7%-
annualized rate in the third quarter of 2017. At this phase, the amount of net export has
decreased significantly, which in turn has affected the country’s economic growth adversely.
However, in the fourth quarter, this growth rate has increased by 2.3% due to increase in
business investment compare to the third quarter (tradingeconomics.com, 2018). Hence,
according to the Statistics of Canada, this can be said that the chief contribution behind this
economic growth is ample amount of government spending. On the contrary, this growth
trend has declined
Reason behind economic growth:
Through measuring the increasing trend of real gross domestic product (GDP) of a
country, its economic growth can be measured (Huchet‐Bourdon, Le Mouël & Vijil, 2018).
Hence, to analyze this economic growth, it is essential to observe some macroeconomic

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concepts of the country, for instance, GDP growth trend for the last five years including the
trend of employment opportunities and net export.
Figure 2: Percentage change in real GDP of Canada
Source: (tradingeconomics.com, 2018)
The above figure intends to depict the economic growth of Canada for last 5 years. It
is seen that this trend has fluctuated drastically as and has experienced a negative trend in
2015 and in 2016 (tradingeconomics.com, 2018). However, after that, the country has shown
a rapid increase in its national income since 2017. However, this condition is going to
decrease since 2018.

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Figure 3: Employment rate of Canada
Source: (tradingeconomics.com, 2018)
In figure 3, the employment rate of Canada is shown since 2013. It can be observed
from this above diagram that the employment opportunity has decreased sharply since 2013.
However, after reaching to its minimum point at the initial phase of 2017, the country has
experienced a sharp increase of this trend and at the last quarter of 2017, the country has
generated huge employment. One of the chief drivers of this country’s economic growth in
2017 is this strong labor market (tradingeconomics.com, 2018). However, the initial phase of
2018, this trend of employment generation has decreased again. The tight market along with
an aging population has negatively influenced this growing trend.

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Figure 4: Consumer spending of Canada
Source: (tradingeconomics.com, 2018)
The consumer spending of Canada has increased constantly since 2013 and has
attained a higher level in 2018 (tradingeconomics.com, 2018). The concept of wage can
support this phenomenon. The secured labor market has led the wage to increase. Increasing
consumer spending has led the aggregate demand of the country to increase further, which in
turn has helped Canada to enhance its national income. However, due to excessive public
debt, this trend can be decreased in 2018 instead of increasing wage and employment level.

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Figure 5: Export of Canada
Source: (tradingeconomics.com, 2018)
The above figure has represented a decreasing trend of country’s export since 2017.
Due to this consequence, the Canada’s economic growth has affected adversely and has
strongly dominated this growth in 2018 (tradingeconomics.com, 2018). Hence, the trading
sector, especially the ailing automotive sector of this concerned country has negatively
contributed to its national income.
Hence, after analyzing those macroeconomic factors, it can be stated that Canada’s
economic growth is facing some constraint. Since 2013, the country has experienced drastic
fluctuation in its GDP and export (tradingeconomics.com, 2018). In 2017, this trend has
experienced some positive impacts. However, at present, it is slowing down again.
Future of Canadian economic growth:
The country has experienced some economic constraints based on falling consumer
spending, decreasing residential housing investment and inadequate expenditures of oil and

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gas, which in turn can adversely affect the Canada’s economic growth for the next 15 years.
According to a daily report, oil and gas industry has contributed around 18% to the country’s
GDP and has generated 12% employment opportunity. This sector has also contributed
almost 27% to Canada’s total exports (Www120.statcan.gc.ca, 2018). Hence, the oil shock of
this country in 2014 has generated significant constraints for which the country needs to take
initiative to develop further. Thus, according to some economists, the GDP growth rate of
Canada in 2017 has remained at 3 % while in 2018 it can 2.2% and 1.5% in 2019 (Alexander
& Poirier, 2018).
Conclusion:
In conclusion, it can be stated Canada is facing various obstacles regarding some
macroeconomic factors like national income, export and employment generation, which in
turn have led the country’s economic growth to decrease. The oil shock has chiefly affected
the country’s growth negatively. However, in 2017, Canada has experienced economic
growth due to increasing consumer expenditure and growing housing market.

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References:
Alexander, P., & Poirier, L. (2018). Did US Consumers Respond to the 2014–2015 Oil Price
Shock? Evidence from the Consumer Expenditure Survey (No. 18-13). Bank of
Canada.
Canada Consumer Spending | 1961-2018 | Data | Chart | Calendar | Forecast.
(2018). Tradingeconomics.com. Retrieved 2 April 2018, from
https://tradingeconomics.com/canada/consumer-spending
Canada Employment Rate | 1976-2018 | Data | Chart | Calendar | Forecast.
(2018). Tradingeconomics.com. Retrieved 2 April 2018, from
https://tradingeconomics.com/canada/employment-rate
Canada Exports | 1971-2018 | Data | Chart | Calendar | Forecast | News.
(2018). Tradingeconomics.com. Retrieved 2 April 2018, from
https://tradingeconomics.com/canada/exports
Canada GDP Growth Rate | 1961-2018 | Data | Chart | Calendar | Forecast.
(2018). Tradingeconomics.com. Retrieved 2 April 2018, from
https://tradingeconomics.com/canada/gdp-growth
Canadian GDP unexpectedly falls in January as housing chill sets in - Article - BNN.
(2018). BNN. Retrieved 2 April 2018, from https://www.bnn.ca/canadian-economy-
contracts-in-january-on-oil-real-estate-1.1041570
Huchet‐Bourdon, M., Le Mouël, C., & Vijil, M. (2018). The relationship between trade
openness and economic growth: some new insights on the openness measurement
issue. The World Economy, 41(1), 59-76.

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Rui, Z., Wang, X., Zhang, Z., Lu, J., Chen, G., Zhou, X., & Patil, S. (2018). A realistic and
integrated model for evaluating oil sands development with steam assisted gravity
drainage technology in Canada. Applied Energy, 213, 76-91.
Statistics Canada search results for 'economics growth of Canada'.
(2018). Www120.statcan.gc.ca. Retrieved 2 April 2018, from
https://www120.statcan.gc.ca/stcsr/en/ut1/uts?
q=economics+growth+of+Canada&fq=stclac%3A2&wb-srch-sub=search

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Appendix:
Source: (BNN, 2018)